How to make sure your export will be profitable? Which countries are suitable to export to and what are the costs of market entry? This presentation helps you to increase the ROI of your foreign ventures. For more info see http://www.allianceexperts.com. Download the presentation at http://www.allianceexperts.com/en/knowledge/exports/5-steps-to-make-exports-profitable/

1. 5
steps
how
to
make
your
export
profitable
1
(and
avoid
costly
mistakes)

2. Are
you
making
money
on
your
exports?
Even
if
you
include
all
the
additional
costs
of
being
active
abroad?
2

3. 3
Or
are
you
loosing
money
on
your
exports?
If
you
include
translation
services,
legal
fees,
distributor
margins,
shipping
costs
and
traveling?

4. 4
It
is
good
to
see
exporting
as
an
investment,
but
one
day
it
has
to
pay
off…

5. Alliance
experts
helps
you
to
make
your
exports
pay
off
Alliance
experts
is
a
global
network
of
business
development
specialists.
We
help
companies
enter
new
markets
profitably.
5

6. What
to
expect
in
this
presentation?
6
Slide 8
Slide 31 Slide 42
Slide 13
Which countries are suitable for SME’s?
• After filtering we identified 64 countries that are
suitable for SME’s to export to
• Still, these markets need to be checked on customer
demand and competition for your specific offering.
• For each of these markets we have grouped the key
figures on population, earnings, spending, trade, taxes
and urbanisation
The profile of the right local partner
Small
Start-up
Brings in knowledge
Striving for limited
dependence
Brings in manpower
Large
Mature
Brings in network
Striving for large
interdependence
Brings in assets
Estimated costs to enter a new market
(before any substantial revenue comes in)
Nr. Offering / Market Simple Average Complex
1 Simple product 20,000 USD 50,000 USD 80,000 USD
2 Service from abroad 30,000 USD 50,000 USD 80,000 USD
3 Product with service 70,000 USD 100,000 USD 150,000 USD
4 Customised product 70,000 USD 100,000 USD 150,000 USD
5 Customised service 100,000 USD 150,000 USD 250,000 USD
Five steps to make your export profitable
1. Start with a strategy
2. Do market research
3. Find local partners
4. Enter the market
5. Make haste

7. Do
you
prefer
to
read
this
presentation
as
a
downloaded
pdf
file?
7
Get it now from www.allianceexperts.com
(click here)

8. Five
steps
to
make
your
export
profitable
8
1. Start with a strategy
2. Do market research
3. Find local partners
4. Plan & Agree
5. Establish presence

9. Step
1.
Start
with
a
strategy
9
Three
decisions
in
your
market
entry
strategy:
Country
Offering
Approach

10. 1st
aspect:
which
country
to
go
to?
• Where
is
a
need
for
your
products
or
services?
• Where
is
less
competition
than
elsewhere?
• What
is
a
good
country
to
do
business
in?
10

11. The
complexity
of
entering
the
market
differs
per
country
11
Simple
Average
Complex
Distance
Nearby
Far
Language
Same
language
Other
language
Other
writing
Culture
Comparable
Totally
different
Formalities
Open
Bureaucratic
Size
Small
Large

12. Which
countries
you
should
avoid
or
shouldn’t
go
to?
• Alliance
experts
has
done
a
screening
of
180
countries
for
which
recent
World
Bank
data
is
available
• We
first
filtered
out
75
countries
with
a
GDP
of
less
than
20
billion,
the
size
of
Afghanistan.
It
would
require
a
lot
of
effort
for
limited
returns
• Then
we
filtered
another
20
countries
with
a
GDP
PPP
per
capita
less
than
7.000
USD:
not
sufficient
buying
power
• There
are
indexes
for
ease
of
doing
business
and
logistics
performance
in
a
country.
Using
this,
another
21
countries
such
as
Indonesia
and
Colombia
were
filtered
out.
12

13. Which
countries
are
suitable
for
SME’s?
• After
filtering
we
identified
64
countries
that
are
suitable
for
SME’s
to
export
to
• Still,
these
markets
need
to
be
checked
for
consumer
demand
and
competition
for
your
specific
offering.
• For
each
of
these
markets
we
have
grouped
the
key
figures
on
population,
earnings,
spending,
trade,
taxes
and
urbanisation
13
Get the full database with important results now
from www.allianceexperts.com (click here)

14. Top
10
countries
per
GDP
Country GDP
United States 16.768
China 9.240
Japan 4.920
Germany 3.730
France 2.806
United Kingdom 2.678
Italy 2.149
Russian Federation 2.097
Canada 1.827
Australia 1.560
Country
GDP/capita
PPP
Qatar 136.727
Luxembourg 90.410
Singapore 78.763
Norway 65.461
Switzerland 56.565
Saudi Arabia 53.644
Hong Kong SAR 53.216
United States 53.042
Netherlands 46.298
Ireland 46.140
14

15. Top
10
countries
on
trade
and
tax
Country
Trade of
services
Luxembourg 214%
Ireland 102%
Singapore 87%
Hong Kong 67%
Cyprus 48%
Estonia 43%
Belgium 40%
Denmark 39%
Panama 34%
Thailand 30%
Country
Total tax
rate
Qatar 11%
Kuwait 13%
Bahrain 14%
Saudi Arabia 15%
United Arab Emirates 15%
Singapore 18%
Croatia 19%
Luxembourg 20%
Canada 21%
Hong Kong SAR 23%
15

16. Top
10
countries
for
ease
of
doing
business
and
population
density
Country
Ease of
business
Singapore 1
New Zealand 2
Hong Kong 3
Denmark 4
Korea, Rep. 5
Norway 6
United States 7
United Kingdom 8
Finland 9
Australia 10
Country
Population
density
Singapore 7.713
Hong Kong 6.845
Bahrain 1.753
Korea, Rep. 516
Netherlands 498
Puerto Rico 408
Israel 372
Belgium 370
Japan 349
United Kingdom 265
16

17. 2nd
aspect:
determine
your
offering
Coming
from
abroad
you
will
always
have
a
disadvantage
compared
to
local
producers.
So
make
sure
that
your
offering
either
is:
• Unique
(so
you
won’t
have
any
competitors)
• Better
(or
being
perceived
as
better),
and/or
• Cheaper
17

18. What
basic
type
of
offering
do
you
have?
1. Simple
product,
perhaps
differences
per
country,
no
customisation
2.
Service
that
can
be
provided
electronically
or
from
your
homeland
3. Product
with
installation,
integration
or
training
4. Customised
product
5.
Customised
service
or
solution
(e.g.
with
local
consultants)
18

19. 3rd
aspect:
market
approach
• How
to
set
up
your
distribution?
• Work
with
own
staff,
joint
venture
partners,
distributors,
agents?
• How
to
arrange
payment
and
warranties?
19
Basic
type
of
offering
(nr.
1
to
5,
see
previous
slide)
Market
approach
leads
to

20. Offering
type
1.
Simple
product
Characteristics:
• Not
client
specific,
possibly
country
or
region
specific
• Can
easily
be
sold
through
a
distributor,
no
additional
service
Approach:
• Create
awareness
with
potential
foreign
distributors
– Internet
marketing
– Trade
shows
• Sell
directly
to
the
distributor
and
leave
the
rest
to
him
20

21. Offering
type
2.
Service
that
can
be
provided
from
abroad
Characteristics:
• Delivery
follows
the
same
process
as
for
local
customers
• Sales
process
is
relatively
straightforward
Approach:
• Choice
for
internet
sales,
local
distributors/agents
or
a
combination
• For
internet
sales:
set
up
payment
process
• For
local
distributors/agents:
set
up
an
incentive
structure
and
provide
them
with
marketing
tools
21

22. Offering
type
3.
Product
with
installation,
integration
or
training
Characteristics:
• Not
client
specific,
possibly
country
or
region
specific
• Distributors
need
to
be
trained
before
they
can
sell
or
deliver
the
product
Approach:
• Identify
potential
distributors
and
select
one
or
a
few
• Train
the
distributors
and
help
them
market
your
product
• Manage
and
evaluate
your
distributors
22

23. Offering
type
4.
Customised
product
Characteristics:
• Client
specific,
made
to
order
(bespoke)
• Distributors
serve
as
the
channel
for
your
contact
with
the
customer
Approach:
• Decide
upon
distribution
or
agency
agreement
• Set
up
exclusive
distribution
per
country/region/market
segment
• Negotiate
a
distribution
margin
• Train
distributors
in
the
sales
process
23

24. Offering
type
5.
Customised
service
or
complete
solution
Characteristics:
• Although
standard
components
may
be
used,
strong
interaction
with
the
client
is
needed
to
get
to
the
right
results
• Consultative
selling
process
Approach:
• Work
with
a
dedicated
and
specialised
local
sales
partner
• Fly
in
or
relocate
own
sales
support
and
project
delivery
staff
• Work
on
a
joint
marketing
and
sales
plan
that
involves
presentations,
exhibiting
at
trade
shows
and
collaboration
with
industry
organisations
24

25. Step
2.
Do
market
research
• Start
with
a
first
orientation:
go
to
the
country
yourself
• Read
about
the
country,
talk
to
people
living
there
• Do
research
on
how
they
like
your
products
or
services
and
how
you
can
enter
the
market
25

26. Market
research
is
an
insurance
fee
you
pay
to
reduce
your
risks
No market research Market research
Potential outcome
Odds Financial
result
Odds Financial
result
No market entry 0% 20% 0
Market entry is failure 60% - 100.000 32% - 100.000
Market entry is success 40% + 100.000 48% + 100.000
Costs of research 100% - 10.000
Total weighted outcome - 20.000 + 8.000
26
As
a
result
of
your
market
research
you
might
not
want
to
enter
the
market,
but
if
you
enter
the
market,
the
likelihood
of
success
is
much
higher.

27. Choose
the
market
research
that
helps
you
with
your
decisions
• General
reports
on
market
volumes
don’t
show
where
there
is
an
opportunity
in
the
market
• Only
if
you
do
field
research
you
will
find
the
best
chances
• Ask
distributors
how
they
perceive
your
product
and/or
service
27

28. Step
3.
Find
local
partners
• If
you
want
to
set
up
everything
from
abroad
it
is
very
costly
• Local
partners
have
the
right
market
knowledge,
a
network
and
are
trusted
more
easily
• Never
start
with
the
first
partner
that
comes
along
without
talking
to
others.
28

29. Process
of
finding
the
right
partner
29
Company
profile
What
makes
your
company
attractive
and
what
kind
of
partners
are
you
looking
for?
Long-­‐list
and
short-­‐list
Who
are
potential
partners
in
the
market?
Approach
Find
the
decision
makers
and
check
their
interest
in
your
company
after
seeing
your
profile
Visit
and
Selection
Visit
the
companies
and
make
your
choice

30. Questions
to
ask
yourself
when
looking
for
a
local
partner
• What
customers
you
would
like
to
get
in
touch
with?
• What
would
give
more
credibility
to
your
product
or
service?
• In
which
region
/
market
segment
are
the
biggest
opportunities?
30

31. The
profile
of
the
right
local
partner
Small
Start-­‐up
Brings
in
knowledge
Striving
for
limited
dependence
Brings
in
manpower
Large
Mature
Brings
in
network
Striving
for
large
interdependence
Brings
in
assets
31

32. Structure
for
drafting
your
partnering
profile
We
are
looking
for
a
business
partner!
Your
company
description
in
maximum
4
lines,
including
some
key
metrics
or
numbers
or
statistics
What
makes
your
company
unique
in
its
market?
What
is
your
ambition
for
the
next
three
years?
What
should
a
partner
add?
What
is
the
benefit
for
the
partner
working
with
you
instead
of
another
company?
How
would
you
like
to
split
revenue
and
costs?

33. Step
4.
Plan
&
Agree
• Conclude
agreements
with
your
local
partners
• Localise
your
offering
• Find
your
way
through
custom
formalities
• Arrange
easy
payment
• Train
your
partners
33

34. Conclude
agreements
with
your
local
partners
• Start
with
the
outlines
for
the
partnership
• Negotiate
first
without
the
lawyers
involved:
work
towards
a
deal
sheet
• Check
whether
the
right
incentives
are
in
place
for
each
partner
and
chances
on
opportunistic
behaviour
are
small
• Conclude
by
having
the
partnering
arrangement
drafted
in
a
balanced
way
34
Alliance experts has structured
questionnaires with all relevant
aspects that will quickly help
you to arrive at a deal sheet.
This deal sheet can serve as
input for your lawyers, saving
you on your legal fees.

35. For
every
partner
there
needs
to
be
the
right
balance
35
Resources
Responsibilities
Risks
Rewards
(profit)
Ruling
power
(votes)

36. Local
packaging
and
translations
• Decide
whether
you
want
to
promote
your
product
as
a
local
or
a
foreign
brand
• Check
on
legal
requirements
such
as
certification
and
ingredient
declarations
• People
are
going
to
search
for
your
website:
make
sure
there
is
a
proper
translation
36

37. Navigate
through
custom
regulations
• Don’t
focus
on
avoiding
import
duties,
but
on
getting
your
products
quickly
through
customs
• Let
your
local
partner
be
involved
or
responsible
for
the
import
clearing
• For
your
first
shipments,
make
use
of
exemptions
for
smaller
quantities
(e.g.
boxes
less
than
50kg
in
China)
37

38. Train
your
partner’s
sales
people
• Part
of
the
sales
process
is
providing
information
and
removing
objections
• The
more
your
partner’s
sales
people
know,
the
easier
they
can
sell
your
product
• The
easier
it
is
for
them,
the
more
they
will
push
your
product
• Make
sure
you
can
train
the
sales
people
yourself
and
discuss
what
support
they
need
38

39. Step
5.
Establish
presence
• Market
entry
costs
are
inevitable
• Returns
will
only
come
later
• The
more
determined
you
enter
the
market,
the
quicker
the
returns
will
come,
the
lower
the
risks
and
the
quicker
you’ll
earn
your
investment
back
• Be
on
top
of
things
39

40. Market
entry
costs
Independent
of
market
size
• Market
orientation
• Market
research
• Product
adaptions
• Translations
• Partner
selection
• Partner
contracting
• Partner
training
• Making
marketing
materials
Dependent
on
market
size
• Launch
campaign
• Brand
awareness
campaigns
• Sampling/promotions
• Sales
efforts
or
sales
support
40

41. Market
entry
costs
depend
on
your
basic
type
of
offering
and
the
complexity
of
the
market
1. Simple
product,
perhaps
differences
per
country,
no
customisation
2.
Service
that
can
be
provided
electronically
or
from
your
homeland
3. Product
with
installation,
integration
or
training
4. Customised
product
5.
Customised
service
or
solution
(e.g.
with
local
consultants)
41

42. Estimated
costs
to
enter
a
new
market
(before
any
substantial
revenue
comes
in)
Nr.
Offering
/
Market
Simple
Average
Complex
1
Simple
product
20,000
USD
50,000
USD
80,000
USD
2
Service
from
abroad
30,000
USD
50,000
USD
80,000
USD
3
Product
with
service
70,000
USD
100,000
USD
150,000
USD
4
Customised
product
70,000
USD
100,000
USD
150,000
USD
5
Customised
service
100,000
USD
150,000
USD
250,000
USD
42
Hours
based
on
a
all-­‐inclusive
cost-­‐based
rate
of
100
USD/hour,
travel
on
economy
flights
and
4*
hotel

43. Investments
versus
returns
Nr.
Type
year
1
year
2
year
3
year
4
year
5
1
Simple
product
2
Service
from
abroad
3
Product
with
service
4
Customised
product
5
Customised
service
43

44. How
to
estimate
your
returns?
Internally
• What
is
your
gross
margin
on
your
products
or
services?
• What
costs
do
you
have
for
local
distribution
or
delivery?
Externally
• What
is
your
market
share
in
your
home
market?
• How
long
did
it
take
you
to
get
that
market
share?
• What
is
the
expected
volume
in
your
target
market?
• What
market
share
do
comparable
competitors
have?
• What
is
the
market
share
in
comparable
sectors
of
your
local
partners?
44

45. Plan
first
before
you
enter
a
new
market
45
Alliance
experts
has
sample
budgets
and
calculation
tools
to
estimate
the
costs
of
market
entry
and
the
returns.
Book
an
export
strategy
session
with
us
to
use
our
tooling
for
your
specific
situation.
Complexity
of
your
target
country
Your
type
of
offering
Estimate
your
costs
for
market
entry
Internal
External
Estimate
your
returns
Determine
your
payback
time
Additional
margin
Potential
volume

46. How
to
reduce
your
need
for
financing?
46
Market
entry
costs
are
inevitable
Establish
presence
quickly
This
way
you
reduce
risks
and
competition
Revenu
comes
in
faster
You’ll
earn
back
your
investment
quicker

47. Be
focused,
reduce
risks
• Ask
local
partners
for
their
roll-­‐out
plan
and
estimates.
• Ensure
partner
commitment
and
availability
for
training
before
concluding
the
deal
• Be
on
top
of
things:
have
somebody
stationed
nearby
and
be
available
throughout
your
partner’s
office
hours
• Follow
the
local
market
developments
closely
47

48. Subsidies
for
export
• Many
countries
have
subsidies
for
export
or
help
local
companies
in
a
different
way
• Collaboration
with
other
companies
to
enter
a
new
market
will
often
be
facilitated
• Ask
a
local
export
specialist
for
the
applicable
arrangements
48

49. Conclusions
• Entering
a
new
market
will
always
cost
you
time
and
money.
Plan
before
you
act!
• Don’t
let
coincidence
guide
your
steps:
do
a
country
selection,
market
research
and
a
broad
partner
selection
• Find
people
that
can
help
you
bridge
cultural
differences
49

50. Alliance
experts
is
a
global
network
of
business
development
specialists
50

51. We
help
companies
enter
new
markets
profitably
We
are
nearby
in
your
home
country
and
well
acquainted
with
the
country
where
you
intend
to
go.
Use
our
support
in:
• Strategic
export
advice
• Market
research
• Search
and
selection
of
local
partners
• Negotiation
support
• Local
representation
Look
for
more
information
on
www.allianceexperts.com
51

52. Free
resources
available
for
you
• This
presentation
as
a
pdf
• Our
database
with
important
metrics
of
64
countries
that
are
suitable
for
SME’s
to
export
to
• The
article
‘What
is
the
ROI
of
your
international
strategy?’
52
Download it now from
www.allianceexperts.com
(click here)
Pictures
credits
to
www.freedigitalphotos.com
and
ddpavumba
(slide
2
&
3),
Renjith
Krishnan
(slide
9,
10,
37)
and
Stuart
Miles
(slide
9
&
17)